The Checkered History of Eftpos – Australia’s Debit Payment Scheme
Eftpos, Australia’s widely used debit payment scheme, has faced significant trials and tribulations throughout its history. The Federal Court proceedings have recently spotlighted the challenges it has encountered over the past decade, casting doubt on its commercial viability.
Eftpos’s Technological Limitations
One of Eftpos’s major difficulties was its inability to process online payments. In an age where the digital economy is booming, this limitation posed a significant obstacle. Moreover, Eftpos was unable to process international payments, further limiting its utility for consumers and businesses alike.
Struggles with Contactless Payments
Another area where Eftpos struggled was in the realm of contactless payments. In today’s fast-paced environment, contactless payments have become a critical feature for retail transactions. Paul Jennings, the former interim CEO of Eftpos, has admitted in court that the company was slow to roll out this essential capability, contributing to its decline.
The Retail Sector’s Concerns
For major retailers such as Coles, Eftpos’ inability to process online transactions has been a longstanding issue. Shane Harris, Coles’ head of payments, concurred with this viewpoint in his court appearance. It was clear that Eftpos’ limitations made it a less effective competitor in the market, especially against giants like Visa and Mastercard. This situation could potentially lead to Eftpos being knocked out of the market if it did not keep up with technological advancements.
ACCC’s Allegations Against Mastercard
The Australian Competition and Consumer Commission (ACCC) has raised allegations against Mastercard, accusing it of exploiting its market power. The ACCC alleges that Mastercard negotiated strategic agreements with 20 large Australian retailers, offering them discounts on fees for accepting credit card payments if they routed most of their debit card transactions through its processing platform. This action, according to the ACCC, constituted an abuse of market power, as Mastercard allegedly leveraged its influence as a credit card provider to reduce competition in the debit card processing market.
The ACCC further claimed that Mastercard began misusing its market power in 2017 when the Reserve Bank was encouraging banks to expedite the rollout of “least cost routing” services for debit cards. This alleged misuse of power is a significant part of the ongoing court proceedings.
Conclusion
The troubled history of Eftpos and the allegations against Mastercard underscore the competitive and rapidly evolving nature of the payments industry. As technology continues to advance, payment systems must adapt to meet changing consumer needs and maintain their market position. It remains to be seen how Eftpos will navigate these challenges and what the outcome of the court proceedings will be.
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